5 Secrets to Reducing Your Telecommunications Costs

By nature, a business's primary concern is maximizing net revenue. There are two fundamental ways to reach this goal. Most obviously, increase sales. The second method can be just as effective, and during economic downturns, you'll see it deployed with great vigor by a company's financial department. Slash costs. Yet, companies often cut costs the wrong way. Indeed, reduction often damages or destroys the value companies offer. And there is one area of expenses that seems hidden – one that even savvy cost watchers ignore: telecommunications services. Telecommunications services include local voice service, long distance voice service, Internet access, conferencing, data networks and managed services. Because technology surrounds us, many companies, surprisingly, give little thought to how they might earn significant savings by examining the costs of these services; or they fail to implement a strategic plan across all the services. If you haphazardly cut costs in any of these areas, the unintended consequence could be contracting with an inferior service provider, receiving an inferior service type, or both. It can bring a company to a standstill, and ultimately cost a company more in lost revenue.

However, if done properly, a company can effectively audit its telecommunications services in a manner where both costs are cut while enhancing efficiency and performance. Here are five elements to consider when analyzing your company's telecommunications services.

• In general, if you are paying more than $.045 per minute for long distance calls, you are paying too much. If you are located in a densely populated area, consider $.035 as your breakpoint. Long distance service has become a commodity, and many reasonably priced options are available to customers.

• Consolidation of vendors can lead to better prices and better service. A telecommunications company is almost always in a position to provide more cost-effective long distance rates if it also provides the local service for the company. Also, having one vendor can lead to the resolution of service issues more quickly because there is only "one throat to choke."

It doesn't just stop with voice service, though. Having your voice service provider also provide your Internet access can create cost savings. Many providers offer deeper discounts when they provide both voice services and Internet services, and many offer all-inclusive packages that can cut costs. It also puts the provider in a position to bundle the services together, which brings us to…

• Consolidation of services can lead to better prices and better services. A company that chooses to segregate its voice and data services must have both a voice network and an Internet (data) network. This means the company has to pay for, and maintain, two disparate networks. The advent of Voice over Internet Protocol (VoIP) has allowed the merging of both voice and Internet services into one network. By eliminating the voice only network (POTS Lines, PRIs, etc.) and putting all traffic on one IP network, costs are significantly cut. VoIP is a beautiful thing for business owners.

• Instead of buying a phone system, let your carrier host it for you. Phone systems (PBXs) are expensive and have a limited life span. Depending on a company's size, the price of a PBX can range from about $10,000 to more than $100,000. In addition to the significant capital expense, maintenance contracts for PBXs can cost hundreds of dollars per month.

Hosted PBX service eliminates these costs, while offering a platform that is significantly more scalable and "feature-rich" than a premise-based PBX. The system can grow with you, and new features or upgrades are available to you at no additional cost.

• Does your company own and maintain its own servers? The cost of purchasing, maintaining and administering servers and server-based applications can be a gigantic drain. All servers eventually require replacement and server operating systems (such as Windows) eventually need updating.

Many telecommunications service providers now include managed services with their other traditional service. This allows companies to run applications on servers that the providers host and maintain, rather than on servers that the company must own and maintain. The company accesses its applications through the Internet, while not having to worry about maintaining the infrastructure or paying associated overhead costs. It's a very simple proposition. Every dollar that you waste on telecommunications costs is money dripping directly from your bottom line. It's worth an annual review.

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